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Gattorna v. American States Ins. Co.





Appeal from the Circuit Court of Kane County; the Hon. Marvin Dunn, Judge, presiding.


Rehearing denied April 18, 1984.

Plaintiff, Benedict Gattorna, appeals from an order of the circuit court of Kane County which granted summary judgment in favor of defendant, American States Insurance Company, in connection with plaintiff's suit to recover for hospital, funeral and medical expenses incurred as a result of an automobile accident in which the plaintiff's daughter suffered fatal injuries. Plaintiff contends that summary judgment was improperly entered, as the settlement of the wrongful death claim growing out of the accident did not prejudice defendant's subrogation rights. Defendant, in support of the judgment, counters that plaintiff was not in any event personally entitled to receive payment under the policy.

We reverse.

Prior to the automobile accident involved in this case, the defendant issued plaintiff a policy of automobile insurance under which plaintiff was the named insured. A special endorsement to the policy provided that coverage was also extended to the plaintiff's daughter, Amy Gattorna. On July 26, 1979, a date by which Amy Gattorna had reached the age of majority, she was involved in an automobile accident while a passenger in a vehicle driven by Mary Ellen Weisschnur. Amy Gattorna was seriously injured in the accident and died three days later.

On August 21, 1979, St. Charles National Bank, as administrator of the estate of Amy Gattorna, commenced suit against the drivers of the vehicles involved in the accident to recover damages for wrongful death and personal injuries. On April 11, 1980, the bank, acting as administrator of the estate, entered into a "Covenant Not to Sue" with Mary Ellen Weisschnur whereunder the latter was released from further liability for consideration of $50,000. The parties agree that nothing in the record on appeal indicates that Weisschnur or her insurer were aware of any subrogation interest which the defendant might have concerning the estate at the time the covenant was executed.

The plaintiff thereafter filed a three-count complaint against the defendant. In count I, the plaintiff sought to recover $12,558.71 under the terms of the automobile insurance policy, which amount represented medical and funeral expenses incurred by plaintiff on his daughter's behalf. Counts II and III sought recovery of punitive damages and attorney fees on account of defendant's alleged vexatious and unreasonable conduct. The defendant filed an amended answer which raised by way of affirmative defense that the execution of a general release in favor of Mary Ellen Weisschnur had prejudiced the defendant's subrogation rights, barring the plaintiff from recovering any medical expenses otherwise payable under the terms of the insurance policy. It was on the basis of the plaintiff's acceptance of payment in consideration of the release, and the alleged attendant prejudice to the defendant's subrogation rights that the defendant filed its first motion for summary judgment. That motion was denied, and defendant filed a second motion which alleged that, based upon the plaintiff's answers to interrogatories, substantial portions of the claimed expenses had been paid for by the bank as administrator of Amy Gattorna's estate and by insurance, so that only $175 of the bills had been paid by plaintiff. The defendant claimed that the "Other Insurance" clause of the policy precluded the plaintiff's further recovery. The motion additionally repeated the defendant's argument concerning the impairment of its subrogation rights, and questioned the plaintiff's right to receive payment under the insurance policy.

The court found that the plaintiff was not entitled to recovery for the amounts claimed "inasmuch as he was not an injured party and further owed no legal duty to pay for the expenses of the injured party * * *." The defendant's motion for summary judgment was accordingly granted, and this appeal followed.

Two issues are presented: (1) Whether plaintiff, as named insured under the policy, was personally entitled to receive payment for the medical and funeral expenses of his daughter, who had attained majority, and (2) Whether settlement and release of the tort claims arising from the fatal accident operated to prejudice the insurer's rights of subrogation, barring plaintiff's recovery.

We begin with a review of the grounds articulated by the trial court for the award of summary judgment: that plaintiff, who was neither the injured party nor who owed a legal duty to pay for the expenses at issue, was not entitled to recover under the policy for his daughter's medical and funeral expenses. In this regard, the plaintiff asserts a right to recover under the language of his policy and denies the applicability of any of the policy's limits of liability.

Plaintiff's claim in this case arises under the basic personal injury protection and excess personal injury protection coverages of his policy. The basic coverage provided payment of medical, hospital and funeral expenses "to or for the benefit of the injured person * * *" while excess coverage would make payments "to or for the benefit of the named insured and any relative who sustains bodily injury caused by an accident involving a motor vehicle * * *." Under each coverage, identical definitions were given of the terms "named insured" (the individual named in the declarations including his spouse if a resident of the same household), "relative" (a relative of the named insured who is a resident of the same household) and "bodily injury" (bodily injury, sickness or disease, including death at any time resulting therefrom). The term "injured person" included under each coverage the named insured or any relative who sustained bodily injury in any motor vehicle accident.

Plaintiff contends that as the purchaser and named insured under the policy, he is entitled to the payments set out under the basic and excess personal injury protection coverages for his daughter's medical and funeral expenses. He relies upon the provision in the basic coverage that payment will be made "for the benefit of the injured person" and the provision in the excess coverage that payment would be made "to or for the benefit of the named insured and any relative who sustains bodily injury." Since the expenses at issue were incurred in the medical treatment of the injured party and in paying her funeral expenses, plaintiff concludes that those expenses were made for her benefit and must be reimbursed under the terms of both coverages.

Defendant does not dispute that medical and funeral expenses are reimbursable under the automobile insurance policy. It does, however, contest plaintiff's entitlement to payment for those expenses. It denies that plaintiff's status as purchaser or named insured under the policy vested him with any right to payment on the facts of this case. In defendant's view, any medical and funeral expenses were incurred either by Amy Gattorna or by her estate. In essence, the insurer claims that its duty to pay benefits "for the benefit of" the injured person is the obligation to make payments to a deceased person's estate or personal representative, not an obligation to reimburse the injured party's relatives for voluntary payments they may have made on the injured person's behalf. The defendant claims that a person in the latter category lacks contractual standing to claim reimbursement notwithstanding his status as purchaser or named insured of the policy.

Generally, an accident insurer is liable under a policy only to the person therein designated as beneficiary. (Kitchen v. North American Accident Insurance Co. (1954), 2 Ill. App.2d 23.) The terms of a policy providing personal injury protection coverage (PIP) may in certain circumstances be affected by representations made by the insurer in promotional materials purporting to describe the available coverage (cf. Foster v. Crum & Forster Insurance Cos. (1976), 36 Ill. App.3d 595) (two separate renewals of policy containing restrictive language negated contention that promotional material broadened policy's terms), but no such contention has been advanced in the case at bar. Rather, the controversy here arises because the policy ...

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